UNION BUDGET 2017-18 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT at 7.10 % for FY16 - FY17

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2016 - 17 IS ₹ Rs. 151,93,000 LAKHS CR AND AT 2011-12 PRICES ITS AT Rs. 121,55,000 LAKHS CR. 

FY17 FISCAL DEFICIT AT Rs. 5,47,000 CR.
FY17 TOTAL SUBSIDES AT Rs. 2,40,000 CR.

THE CENTER'S TOTAL REVENUE 2017-18 IS PROJECTED AT Rs. 19,11,578 Cr.. 

THE CENTER'S EXPENDITURE 2017-18 IS PROJECTED AT Rs. 21,46,735 Cr.
FY18 NET MARKET LOANS OF Rs. 3,48,000 CR.

INFLOWS (Rs. in Crs)	AMOUNT
CORPORATE TAX	5,38,744
INCOME TAX	4,41,255
CUSTOMS DUTY	2,45,000
EXCISE DUTY	4,06,900
SERVICE TAX	2,75,000
TAX OF UNION TERRITORY	4,679
GROSS TAX REVENUES	19,11,578

NET TAX REVENUE (Rs. in Crs)

12,27,000

STATES SHARE IN TAXES (Rs. in Crs)

6,75,000

NON TAX RECEIPTS (Rs. in Crs)	AMOUNT
INTEREST RECEIPTS	19,000
DIVIDENDS & PROFITS	1,42,000
OTHER NON TAX RECEIPTS	1,27,000
TOTAL	2,88,000

NON DEBT CAPITAL RECEIPTS (Rs. in Crs)	84,000
DEBT RECEIPT (Rs. in Crs)	5,47,000
TOTAL CAPITAL RECEIPTS	6,31,000

* NATIONAL CALAMITY CONTINGENCY DUTY (NCD) transferred to ncd fund Rs. 10,000 Cr. 

OUT FLOW (Rs. in Cr)	AMOUNT
PENSION	1,31,000
RURAL DEVELOPMENT	1,29,000
DEFENCE	2,62,000
SUBSIDIES	2,40,000
TRANSFER TO STATES	1,37,000
INTEREST PAYMENTS	5,23,000
OTHER GENERAL SERVICES	2,14,000
TRANSPORT	1,24,000
HOME AFFAIRS	84,000
EDUCATION	80,000
ENERGY	37,000
URBAN DEVELOPMENT	41,000
SOCIAL WELFARE	39,000
HEALTH & FAMILY WELFARE	49,000
AGRICULTURE & ALLIED ACTIVITIES	57,000

SOME MORE POINTS FROM BUDGET  

® Govt. committed to achieve Fiscal deficit target of 3.2 % of GDP for FY17-18 followed by fiscal deficit of 3.00 % for 2019. Abolition on plan, non-plan expenditure, focus on capital expenditure which will be 25.4 %.

® Existing rate of tax for Individuals between Rs. 2.5 lakhs to Rs. 5 lakhs reduced to 5 % from 10 %, all other categories of tax payers in subsequent brackets will get benefit of Rs. 12,500. A simple 1 page return for people with annual income of Rs. 5 lakh other than business income.

® Proposes to imply additional 10 % surcharge on individual income above Rs. 50 lakh and upto Rs. 1 Cr to make up for Rs. 15,000 Cr loss due to cut in persoanl I-T rate. 15 % surcharge on individual income above Rs. 1 Cr to remain. Proposes to have carry forward of MAT for 15 years. 

® Out of 13.14 lakh registered companies - only 5.97 lakh companies have filed returns for 2016-17. About 3.7 Cr individuals filed tax returns & 99 lakh showed income above 2.5 lakh, and 1.95 Cr individual showed income between Rs. 2.5 lakh to Rs. 5 lakh and out of 76 lakh individual assessees declaring income more than Rs. 5 lakh - 56 lakh are salaried. Only 24 lakh people showed income more than Rs. 10 lakhs. Only 1.72 lakh people showed income of more than Rs. 50 lakh a year but 1.25 Cr cars sold last year, 2 Cr Indians travelled aboard in 2015. 

® Propose to have NO CASH Transaction of more than Rs. 3 Lakh and a penalty of equal amount to be levied in case of breach. Limits the cash donation by charitable trust to Rs. 2000. Maximum amount of Cash donation for political parties will be Rs. 2000 from any one source but they will be entitled to receive donation by cheque or digital mode from donors. Amendment is proposed for and in RBI ACT whereby a donor can purchase these bonds from banks or post office via cheque or digital transaction, they can be redeemed only by registred political parties. Proposes to have carry forward of MAT for 15 years. And for MSME propose to reduce tax for small companies with turnover of upto Rs. 50 Cr to 25 %, 67 lakh companies fall in this category & 96 % of companies to get this benefit. The Revenue loss of Rs. 20,000 Cr.  

® Proposes to reduce basic customs duty for LNG to 2.5 % from 5 %. Rs. 10,000 Cr has been set aside for Banks recapitalisation, Rs. 64,000 Cr for National Highways, Rs. 10,000 Cr for BharatNet project to expand Broadband coverage. 

® Proposes to finish 1 Cr houses by 2019 for those living in kachcha houses and targets to construct roads which increased it pace to Rs. 133 km/day in 2017. To allocate Rs. 48,000 Cr to MGNREGA and would bring out 1 Cr rural families out of poverty and 100 % rural electricification by 2018.  .

®  Proposes to list PSE to foster public accountability with time bound listing, to create integrated public sector oil major. Also proposes to launch new ETF. The shares of Railways PSE like IRCTC would be listed and FIPB will be abolish in 2017-18. FPI category 1 and 2 investors exempted from indirect transfer provision. GST preparedness of IT system on schedule and not many changes to excise duties since GST will be implemented soon.

® To prevent evasion of capital gains tax via investment in bogus company, budget proposes long term capital gain tax on shares purchased after 1 OCT 2004, such transaction will be taxed at 10 % longterm capital gain tax if Securities Transaction Tax (STT) is not paid at the time of purchase.     .

® Proposes to bring out 1 Cr households out of Poverty by 2019. For affoardable housing the Area of 30 Sq.mtr (322.917 Sq.ft.) only in 4 metropolitan city limits and 60 Sq.mtr (645.835 Sq.ft.) for the rest of the country to be counted as Carpet area and NOT built-up area. And affoardable housing proect should be completed in 5 years from 3 years earlier. Tax on Notional rental income for builders to be calculated only after 1 year from the end of the year in which Completion Certificate is received.

® Proposes to reduce Holding period for Land or building or immovable properties for Capital Gains tax reduced from 3 years to now 2 years. Base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all assets including immovable property. For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed. Capital Gains tax exempted for person holding land from which land was pooled for creation of State capital of Telangana. if land belonging to owners as on 2.6.2014. .

® Proposes concessional withholding rate of 5 % for interest received by foregin entities on loans given in India to be contiuned for another 3 years beyond June 20, 2017. Startups to get two relaxtation under the scheme of Income tax holiday given last year with the condition that continuous holding of 51 % voting rights to be relaxed as long as the original investment of promoter is not diluted and this exemption is available for 3 years out of any 7 years from the date of establishment instead of 3 years out of 5 years.  .

® Proposes deduction for provision for NPA of banks to be increased from 8.5 % instead of 7.5 % of profit. In case of NPA of Non-Scheduled Cooperative banks, interest to be recognised as income only when received.

® In the presumptive Income tax for small traders, income to be taken as 6 % of turnover which is received by digital or banking means. Cash expenditure allowable to be reduced to Rs. 10,000 from existing Rs. 20,000. The audit limit for business entites opting for presumptive scheme to be increased from Rs. 1 Cr to Rs. 2 Cr. Individual and HUF's not required to keep books of accounts if their turnover is upto Rs. 25 lakhs or income upto Rs. 2.5 lakhs. Professionals in presumptive scheme to pay advance tax only in one installment in March insted of four. TDS of 5 % not to be deducted for individual insurance agents if they certify their income to be below taxable limit.

® Proposes Domestic transfer pricing to be applied only if one of the two companies enjoys specified profit linked deduction  .

®  Proposes the time limit for revising tax return reduced to 12 months. Also time limit for completion of scrutiny will be brought down to 12 months from Assessment year 2019-20 onwards.  .

As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % on every purchase. (Why Strict stop loss of 8 % ?) -  Click Here 

*Reader Friends, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share !!

*Dear Reader friend, if you enjoyed this article, please do share it with your Friends and Colleagues through Facebook and Twitter, and drop in your valuable thoughts in comment box..

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Disclaimer: 

This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.  

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UNION BUDGET 2016-17 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT at 7.60 % for FY15 - 16

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2015 - 16 IS ₹ Rs. 113,51,000 LAKHS CR AND AT 2011-12 PRICES ITS AT Rs. 105,52,000 LAKHS CR. 

FY16 FISCAL DEFICIT AT Rs. 5,32,281 CR.

FY16 TOTAL SUBSIDES AT Rs. 2,50,000 CR.

FY15 FERTILIZER SUBSIDIES AT  Rs. 72,968 CR.

FY16 FOOD SUBSIDIES AT  Rs. 1,35,000 CR.

FY16 OIL-PETROLUEM SUBSIDIES AT Rs. 26,900 CR.

FY16 NET MARKET LOANS OF Rs. 4,25,000 CR. 

THE CENTER'S EXPENDITURE 2015-16 IS PROJECTED AT Rs. 19,78,060 Cr.

INFLOWS (Rs. in Crs)	AMOUNT
CORPORATE TAX	4,93,923
INCOME TAX	3,53,174
CUSTOMS DUTY	2,30,000
EXCISE DUTY	3,18,670
SERVICE TAX	2,31,000
TAX OF UNION TERRITORY	4,791
GROSS TAX REVENUES	16,30,888

NON TAX RECEIPTS (Rs. in Crs)	AMOUNT
INTEREST RECEIPTS	29,620
DIVIDENDS & PROFITS	1,23,780
EXTERNAL GRANTS	2,862
OTHER NON TAX RECEIPTS	1,65,320
RECEIPTS OF UNION TERRITORY	1,339
TOTAL	3,22,921

DEBT RECEIPT (Rs. in Crs)

5,20,709

NON DEBT CAPITAL RECEIPTS (Rs. in Crs)	AMOUNT
RECOVERY OF LOANS & ADVANCES	10,634
MISC. CAPITAL RECEIPTS	56,500
TOTAL	67,134

* Out of the Tax Receipts the Center has to keep aside Rs. 25,000 cr for bank recapitalisation

OUT FLOW (Rs. in Cr)	AMOUNT
PLAN EXPENDITURE	5,50,010
NON PLAN EXPENDITURE	14,28,030
DEFENCE	1,62,759
SUBSIDIES	2,50,433
GRANTS TO STATES & UTs	1,18,356
INTEREST PAYMENTS	4,92,670
OTHER GENERAL SERVICES	35,003
ECONOMIC SERVICES	34,266
Central Assistance to States & Union	2,27,551
CENTRAL PLAN	1,76,076
LOANS TO STATE & UT GOVT	81

SOME MORE POINTS FROM BUDGET  

® Govt. committed to achieve Fiscal deficit target of 3.9 % of GDP for FY16 followed by fiscal deficit of 3.5 % for 2017.

® Direct tax proposals results in Revenue loss of Rs. 1,060 Cr and the indirect tax proposal results in gain of Rs. 20,670 Cr.

® Proposes to imply additional 10 % tax on gross amount of dividend received by the recipients that is individuals, HUF’s, and firms receiving dividend in excess of Rs. 10 lakhs per annum. 

® Proposes a 15 % surcharge on income above Rs. 1 Cr and proposes to raise the ceiling of tax rebate under section 87A from Rs. 2,000 to Rs. 5,000 for individuals with income not more than Rs. 5 lakhs.

® Individuals who do not own any house and also do not get any Rent allowance from employer gets deduction of Rs. 24,000 per annum from their income, hence this limit increased u/s 80GG from Rs. 24,000 per annum to Rs. 60,000 per annum. For first home buyers, additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided the cost of house is not above Rs. 50 lakh.

® Proposes to levy infrastructure cess at the rate of 1 % on purchase of luxury cars exceeding value of Rs. 10 lakh and 1 % on purchase of goods and services in cash exceeding Rs. 2 lakh. Farmers and notified class of persons will have an option of giving a form by which TCS will not be charged. To levy 2.5 % on diesel cars of certain capacity and 4 % on other higher engine capacity vehicles and SUV’s.

® Proposes to give 100 % deduction for profits to an undertaking from a housing project for flats up to 30 sq. meters (322.917 sq.fts) in four metros cities and 60 sq. meters (645.835 sq.ft.) in other cities approved during June 2016 to March 2019 and is completed within 3 years of approval. Minimum Alternate Tax will apply to these undertaking. Service tax exemption to houses up to 60 square meters built under any scheme of the Central or State government including PPP schemes.     

® Presumptive taxation scheme u/s 44AD applicable to small & medium enterprises i.e. a non-corporate business with turnover or gross receipts not exceeding Rs. 1 Cr, at present these are free from maintain details books of accounts and getting audit done, hence are proposed to increase the turnover limit to Rs. 2 Cr, which would be paying 8 % tax on presumptive income. Presumptive taxation scheme on professionals with gross receipts up to Rs. 50 lakh with presumption of profit being 50 % of the gross receipts.

® MAT will be applicable for all the start ups that qualify for 100 % tax exemption. 100 % FDI in marketing of food products produced and marketed in India. Department of Disinvestment will be renamed as Department of Investment and Public Asset management. 

® The allocation of Rs. 1,000 Cr for new EPF scheme. Govt. will pay EPF contribution of 8.33 % for all new employees for first three years. Proposes to allocate Rs. 38,500 Cr for Mahtma Gandhi MGNREGA for 2016-17. Swacch Bharat Abhiyan to get allocation of Rs. 9,500 Cr. LPG connection to be provided under the name of the women members of the family and Rs. 2,000 Cr is allocated for 5 years for BPL families.

® Proposes to allocate Rs. 87,765 Cr to rural sector. And Rs. 2.87 lakh cr will be given as Grant in Aid to gram panchayats and Municipalities. A sum of Rs. 38,500 Cr allocated for MGNREGS. 100 % rural electrification by 1^St may 2018. Pradhan Mantri Krishi Sinchai Yojana will bring 28.5 lakh hectares under irrigation. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs. 20,000 Cr. Proposes to allocate Rs. 35,984 Cr for agriculture and famers welfare.

® Proposes to allocate Rs. 5,500 Cr under Prime Minister Bima Yojana. Also proposes to reduce the loan burden on farmers a provision of Rs. 15,000 cr has been made in BE 206-17 towards interest subvention. And Rs. 850 cr allocated for 4 dairying projects. Proposes to allocate Rs. 19,000 cr under Pradhan Mantri Gram Sadak Yojana and will connect remaining 65,000 eligible habitations by 2019.

® Proposes to allocate Rs. 1,51,581 Cr for social sector including education & health care. Rs. 2,000 Cr allocated for initial cost of LPG connection to BPL families. New health protection scheme will provide health cover upto Rs. 1 lakh per family, for senior citizens an additional top up package up to Rs. 30,000 will be provided. Proposes to build digital repository for all school leaving certificates and diplomas and Rs. 1,000 Cr for higher education financing being allocated. Proposes to allocate Rs. 500 Cr for promoting entrepreneurship among ST/SC and Rs. 1,700 Cr for 1500 multi skill development centres.

® Proposes to allocate Rs. 3,000 Cr for nuclear power generation. Proposes to spend Rs. 27,000 Cr on roadways. Total allocation for road construction including PMGSY is Rs. 97,000 Cr and Rs. 55,000 Cr for roads & Highways development. Total outlay for infrastructure in budget 2016 now stands at Rs. 2,21,246 Cr.

® Proposes to impose Cess called Krishi Kalyan Cess @ 0.50 % on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The cess will come to force with effect from 1 june 2016. Input tax credit of this cess will be available for payment of this cess. Shops to be given option to remain open all seven days in week across markets.

® New derivative products will be developed by SEBI in commodity Derivate market. Rate of Securities transaction tax in case of Options is proposed to be increased from 0.017 % to 0.05 %. Proposed that a person making payment to NRI who does not permanent establishment exceeding in aggregate Rs. 1 lakh a yr as consideration for online advertisement will withhold tax at 6 % of gross amount paid as Equalization levy. The levy will only apply to B2B transaction.

® Proposes to change the excise duty on branded readymade garments and made up articles of textiles with retail sales price of Rs. 1,000 and above from NIL without input tax credit or 6 %/ 12.5 % with input tax credit to 2 % without input tax credit or 12.5 % with input tax credit.

®  Proposes to impose an excise duty of 1 % without input tax credit or 12.5 % with input tax credit on articles of jewellery (excluding silver jewellery- other than studded with diamonds an some other precious stones) with higher exemption and eligibility limits of Rs. 6 Cr & 12 Cr respectively.

®    Proposes to rename the Clean Energy Cess levied on Coal, lignite and peat as Clean Environment Cess and simultaneously increase its rate from Rs. 200 per tonne to Rs. 400 per tonne. To reduce the consumption of tobacco products, excise duty on various tobacco products other than beedi by 10 % to 15 %.

®    NRI without PAN are currently subjected to higher rate of TDS. It is proposed to amend the relevant provision to provide that on furnishing of alternative documents the higher rate will not apply.

® Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 & to 15 % on par with domestic institutions. This will enhance global competitiveness of Indian Stock exchanges and accelerate adoption of best in class technology and global market practices. Also the period for getting benefit of long term capital gain regime in case of Un-listed companies is proposed to be reduced from three years to two years. GAAR would be implemented from 1 April 2017. To promote use of refrigerated containers, it is proposed to reduce the basic custom duty to 5 % and excise duty to 6 %. Banks to be recapitalize with Rs. 25,000 Cr. General Insurance companies will be listed on Stock Exchanges.       

®    Proposes to provide complete pass through of income tax to securitization trusts including trusts of Asset Reconstruction Companies. The income will be taxed in the hands of the investors instead of trusts. However the trust will be liable to deduct tax at source.

®     Plan and Non-plan classification to be done away with from 2017-2018.  Will phase out the deduction under Income Tax, Accelerated depreciation wherever provided in IT Act will be limited to maximum 40 % from 1 April 2020. The weighted deduction under section 35CCD for skill development will continue up to 1 April 2020. Benefit of section 10 AA to new SEZ units will be available to those units which commence activity before 31 March 2020.

®    New manufacturing companies incorporated on or after 1 march 2016 to be given an option to be taxed at 25 % + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. Lower corporate tax rate for next fiscal year for SME i.e Companies with turnover not exceeding Rs. 5 Cr in the financial year ending March 2015 to 29 % + surcharge and cess.

®    Proposes a 100 % deduction of profits for 3 out of 5 years for start-ups setup during April 2016 to March 2019. MAT will apply to such cases. A 10 % of tax on income from worldwide exploitation of patents developed and registered in India by a resident.

®    Non-banking financial companies shall be eligible for deduction to the extent of 5 % of its income in respect of provision for bad and doubtful debts. 

As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % on every purchase. (Why Strict stop loss of 8 % ?) -  Click Here

*Reader Friends, grab a fresh hot cup of coffee, turn on your net & browse on to www.bhavikkshah.blogspot.in & take out few minutes to get to know the most interesting world of investment... Till then HAPPY INVESTING, don't forget to Share !!

*Dear Reader friend, if you enjoyed this article, please do share it with your Friends and Colleagues through Facebook and Twitter, and drop in your valuable thoughts in comment box..

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------
Disclaimer: 

This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.  

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